Advisers who wish to be independent post RDR can use a single platform for the 'majority' of their clients if it is in their best interests, the FSA proposes today.
In its consultation paper (CP) on platforms, the FSA appeared to backtrack on the approach in its March discussion paper (DP) when it warned a firm with a varied set of customers is unlikely to be able to use a single platform for all their customers.
But today it says: "Assuming that use of a platform is in line with the client's best interests, and leads to advice that is suitable, we accept that an independent firm may be able to use a single platform for the majority of their clients."
It says it would "likely be very rare" for firms to use a single platform for all clients for all investments, but it says this could change as the market develops.
In this instance, it says the firm's client bank would have to be defined; "that is, having a similar range of needs and objectives such that the firm's investment proposition - including the use of a particular platform - would be suitable for all of them".
A more likely scenario for firms favouring the single platform approach would be to use one platform for all clients, but only for some of their investments.
"Even when there is a defined category of clients, there are probably going to be outlier clients and hence the potential need for recommending products off platform", it says.
"The platform adopted would need to be competitive in terms of charges and features across the defined category of clients for this to be an appropriate approach."
To meet the RDR's independence definition, the FSA says firms can use a single platform for most of its clients.
However, it says a number of concerns arise with this approach and it would expect that, in this instance, firms would "ensure the platform does not hinder the firm's requirements to meet the independence rules".
For example, using a platform for most clients which only featured products that paid the platform a rebate/fee is unlikely to help a firm meet its obligations to carry out a comprehensive and fair analysis, or the requirement to be unbiased, it says.
The FSA says it is also important for an independent firm to consider the types of products available on the platform and whether extensive use of a platform hinders the firm's obligation to consider all retail investment products that may be suitable for their client.
Use of a single platform "must not give their client a worse outcome than other platforms and/or wrappers in the market", it says.
Consultation closes 17 February 2011.
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